Canada Update: CCS Legal and

Regulatory Developments IEA 4th CCS Regulator Network Meeting

Paris, France - May 9, 2012

Kathryn Gagnon, CCS Policy

Office of Energy Research and Development

Natural Resources Canada

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Outline

1. Brief Context for CCS in Canada

2. Federal – Provincial jurisdictional considerations

3. CCS Legal and Regulatory frameworks – updates

• Provincial

• Federal

1. Context for CCS in Canada

Oil

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For Canada, CCS plays a large part of a

least-cost scenario to reduce GHGs by 2050

40%

Role of CCS in GHG Emissions Reduction Strategy in Canada

Source: National Round Table on Environment and Economy’s “Achieving 2050: A Carbon Pricing Policy for Canada”, 2009

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Five main objectives for CCS

1. Reduce technology risks

2. Gaining public acceptance

3. Providing stable legal / regulatory

frameworks

4. Develop business models / commercial

frameworks

5. Learning-by-doing and knowledge sharing

to reduce the costs

Support for early-mover demonstrations

targets 4 applications

1. Enhanced Oil Recovery (EOR)

• Weyburn-Midale Project (Saskatchewan)

2. Oil sands upgrading

• Shell Quest (Alberta)

• Enhance Carbon Trunk Line (Alberta)

3. Shale gas production

• Spectra Fort Nelson Project (BC)

4. Coal-fired electricity

• SaskPower Boundary Dam 3 (Saskatchewan)

• Swan Hills – underground gasification (Alberta)

• TransAlta Project Pioneer (Alberta) - Cancelled

Spectra – Fort Nelson

SaskPower – Boundary Dam

Weyburn-Midale

Shell – Quest

Enhance – Alberta Carbon Trunk Line TransAlta - Pioneer

Swan Hills

Up to ~ $6 Billion in public-private investment

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2. Federal – Provincial jurisdictional

considerations

• The direct ownership, management and regulation of

most natural resources fall under provincial jurisdiction.

• Issues of interprovincial, national or international concern

fall under federal jurisdiction.

• Responsibilities for environmental protection are shared

between the federal and provincial governments.

Provincial Jurisdiction

• Resource ownership,

management and royalties

• Land-use planning and

allocation

• Laws regarding the exploration,

development, conservation and

use of natural resources within

provincial boundaries

Federal Jurisdiction

• International and interprovincial

issues

• Uranium/nuclear power

• North, offshore,

and Federal lands

• Works declared to be for the

general benefit of Canada

(e.g. science and technology)

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Jurisdiction is a shared responsibility

Existing Legal and Regulatory base – CCS Chain

Capture /

Compression Transportation

Property

Rights Injection Post-Injection

Storage

Existing regulations & standards

apply (e.g. public safety,

environmental, occupational

health & safety)

• Environmental Assessments (federal / provincial)

• Environmental Protection Regulation, including air emissions

• e.g. Federal - proposed GHG Regulations for Coal-Fired Generation

• e.g. Alberta - Specified Gas Emitters Regulation

Provincial - acid gas disposal (Alberta, BC) and EOR (Alberta and Saskatchewan)

Inter-provincial and

international

pipelines (federal),

otherwise provincial

Provincial systems for granting subsurface rights

Provincial - Alberta’s recent amendments across existing pieces of provincial legislation

3. CCS Legal & Regulatory

Framework developments

Provincial government proceeding with

legislation/regulations for CCS projects

British Columbia:

• CCS policy and regulatory framework under development

Alberta:

• Carbon Capture and Storage Statutes Amendment Act (December 2010)

• Regulatory Framework Assessment to identify and address any other potential regulatory gaps for CCS

Saskatchewan:

• Amended Oil and Gas Conservation Act to expand and clarify provincial regulatory authority for carbon storage

Nova Scotia:

• Regulatory/legal report for possible deployment of a pilot CCS project

Alberta CCS Regulatory Framework

Assessment (March 2011)

• Further to 2010 legislative amendments:

• Identify / address any other potential CCS regulatory gaps

• Governed by a Steering Committee

• Supported by an Expert Panel and 4 Working Groups

• Engagement of many stakeholders – more than 100

• Following working groups’ review and analysis, recommend framework enhancements, such as:

• Geological site selection and closure criteria

• Post-Closure Stewardship Fund inputs

• Monitoring, Measurement, and Verification (MMV) requirements / guidance

Alberta CCS RFA – Next steps

• Finalize all recommendations for Steering

Committee approval (mid-2012)

• Public consultation planned for this June

• Opportunity to test recommendations

• Builds on Alberta CCS outreach campaign (Fall 2011)

• RFA Conclusion at end of 2012

• Final report to be provided to Alberta Energy Minister

• Released Natural Gas Strategy in February 2012

• One of 6 action items within “Natural Gas Is a

Climate Solution” is to promote CCS:

• Completing development of a regulatory framework

• Amending legislation, if required

• Working with the BC Oil and Gas Commission to develop

regulations

• Evaluate potential projects

• The 1st 3 activities confirm importance in advancing

BC CCS regulatory frameworks

BC CCS Regulatory Context

• Focus has been review and analysis of the existing

BC oil and gas legal and regulatory framework

• Identify gaps and changes to facilitate CCS projects

• Some gaps identified to date include:

• site selection

• MMV

• long-term liability

• Legislative amendments contemplated for 2013

BC CCS Regulations in Development

• Oil and Gas Conservation Regulations, 2012

• in force following proclamation of amended OGCA

• Amended regulations enable greater oversight for

carbon storage, such as:

• Part VIII – Production Operations:

• Minister may approve or refuse CO2 disposal plan subject to

terms and conditions and be provided with any information

required

• Examples of other applicable parts to CO2 disposal:

• Well testing and measurement and data requirements

• Records and reporting

Saskatchewan CCS Framework Updates

Saskatchewan: Status of long-term liability

for CO2 storage

• The long-term liability for storing CO2 is borne by

well license holders, regulated under the OGCA

• Analogues for liability transfer to the Crown exist

in the Mining Sector

• The Reclaimed Industrial Sites Act addresses the long-

term liability issues posed by uranium mine development

Annex Slides

Alberta CCS Regulatory Background

• Alberta has a solid foundation of analogous oil and gas

regulatory practices

• Recent legislative amendments and regulations reduce CCS

regulatory barriers

• CCS Statutes Amendment Act, 2010

• Carbon Sequestration Tenure Regulation, 2011

• Responds to applications for carbon sequestration tenure for CO2

injection deeper than 1000m below surface

• The Regulation allows for creation of 2 separate Crown agreements

for pore space tenure:

• Evaluation Permit (5 years) to determine storage site suitability

• Carbon Sequestration Lease (15 years)

BC CCS Regulatory Background

• BC’s CCS regulations will build on existing authorities:

• The BC Ministry of Energy and Mines, under the Petroleum and Natural Gas Act, governs CO2 storage rights.

• Under the Oil and Gas Activities Act, the BC Oil and Gas Commission is the regulator of all oil and gas activities, including exploration and use of a storage reservoir.

• Regulations for the injection and underground storage of gases exist for acid gas from natural gas processing

• About 12 permitted sites, providing a foundation for CCS regulations.

Saskatchewan CCS Regulatory Background

• Regulations already in place for some time governing CO2 injection and storage (i.e. Weyburn-Midale EOR project)

• Provincial CCS regulatory framework authorities from:

• Crown Minerals Act authorizes agreements for the lease of spaces

• Crown ownership of minerals on Crown lands

• Oil and Gas Conservation Act (OGCA)

• 2011 amendments expand powers and oversight for the storage of CO2 and other greenhouse gases

• Term “non-oil-and-gas waste” replaced with “non-oil-and-gas substance” to clarify scope to substances from “prescribed industry”

• The Pipelines Act, 1998

• 2009 amendment to cover CO2 pipelines for non-oil and gas purposes